What is the formula for the present value of an asset that, Ask an Expert

Economics

Assume an interest rate of 7% in answering the following problem.

(a) You would be indifferent between getting $12 now and X dollars two years from now. What is X?

(b) What is the present value of an asset that pays $20 one year from now, $15 two years from now, and $45 ten years from now?

(c) What is the formula for the present value of an asset that pays $8 per year every year for the next 10 years, and nothing thereafter? Use the formula to find out the present value of this asset.

(d) What is the formula for the present value of an asset that pays $8 per year forever? Use the formula to find out the present value of this asset.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M957634

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